Syria was here in Mari and Ugarit , where AsSyrian, Sumerian,
Phoenician, Babylonian, Egyptian, Greek and Roman empires and
cultures met and Interactioned
In Syria, Man discovered the mysteries of Agriculture, Metallurgy, and
contrived the foremost alphabet

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NOVEMBER 17, 2009

Damascus Revels in Its New Allure to Investors

Syria, a Former Pariah State Whose Isolation Sheltered It in the
Economic Crisis, Sees New Gains in a Western Embrace

DAMASCUS, Syria -- From the corridors of Syria's stately central
bank to the capital's winding, barrel-vaulted souk in the heart of
the Old City, it is hard to remember that 18 months ago Syria was a
diplomatic and economic pariah state.

Growth is expected to come in this year at a respectable 3%, despite
a big knock from the global financial crisis. European tourists
spill out of recently renovated boutique hotels in the capital's Old
City. American accents boom across the dining room of the Four
Seasons. In the tony Maliki neighborhood nearby, tourists, foreign
businessmen and fashionably dressed Damascenes sip $4 lattes at one
of several bustling cafes.

Syrians and visitors to a popular Damascus market have enjoyed the
country's recent emergence from pariah status.

Central-bank chief Adib Mayaleh is practically giddy about Syria's
new allure to foreign investors. Amid warming ties between the West
and Syria, executives from two French banks recently dropped by his
office to talk about opening branches here. The same French bankers
"previously said they would have nothing to do with me," he says,
gloating.

"We see more and more banks coming here to investigate the market,"
Mr. Mayaleh says. "Syria is virgin territory to explore."

In fact, Syria's still-isolated economy protected it from the worst
of the global financial crisis. Banks here haven't been hit by
defaults. Tourism receipts dipped but are recovering again. A recent
private-sector-led investment boom in real estate shows no signs of
the bust felt in other regional markets like Dubai.

Earlier this year, real-estate adviser Cushman & Wakefield listed
Damascus office space as the eighth most expensive in the world.
That is behind Paris and two spots ahead of midtown Manhattan.

"The only Syrians that can buy houses are those that can sell one
first," says real-estate agent Ayman al-Saman, from his closet-size
agency in the center of town. Residential real-estate prices have
tripled since 2004, he says.

On top of all that, the West's recent embrace of Syrian President
Bashar Assad is translating into a booster shot of economic
optimism.

Bassel Hamwi, deputy chairman of Bank Audi Syria, one of the largest
private banks in the country, said the barrage of U.S. sanctions the
Bush administration slapped on Syria starting in 2004 never was a
real barrier to economic growth. But warming ties with the world's
largest economy can't help but make a difference. "Syria used to be
a 'frontier' market," the Texas- and Harvard-educated banker says.
"As of 2009, I personally consider this an emerging market."

It has been a long road, with plenty of obstacles still ahead. When
Mr. Assad took over here after his father's death in 2000, he kept
tight control of the state, suppressing dissent. But he also ushered
in economic overhauls. Lower import tariffs allowed foreign goods
from China and Europe to flow in. In 2003, banking reform opened the
door to a handful of private lenders. The overhauls brought with
them galloping inflation, but everyday Syrians embraced the new
consumer culture.

"We have lots of industry in Syria that produces everything we need,
but people prefer things from abroad," says 27-year-old shopkeeper
Manhal Moujarid, in a packed appliance store full of Chinese-made
heaters, tucked into the mountainside souk of Damascus's poorer
Muhajireen neighborhood.

Shortly after the U.S.-led invasion in Iraq, Washington accused Mr.
Assad of allowing fighters across the border to battle Americans,
and in 2004 imposed sanctions. In 2005, the U.S. held Syria
accountable for the assassination of former Lebanese Prime Minister
Rafik Hariri and pulled its ambassador. (Syria denies both
allegations.)

The sanctions didn't directly affect much business here since
American companies weren't that active anyway. But U.S. Treasury
officials suggested European firms risked being frozen out of the
U.S. banking system if they didn't play ball.

"Foreign banks were intimidated by the American sanctions," says Mr.
Mayaleh, the central banker.

Then, in what could be one of the most significant diplomatic
rehabilitation acts in recent memory, Mr. Assad turned the tables.
Last year, he agreed to indirect peace talks with Israel. He also
helped to broker a deal between warring Lebanese politicians.
Earlier this year, U.S. commanders traveled to Damascus to discuss
Syria-Iraqi border security cooperation.

French President Nicolas Sarkozy invited Mr. Assad to Paris in the
summer of 2008 and flew to Damascus later that year. Mr. Assad
traveled to France again on Friday.

President Barack Obama made outreach to Syria a plank of his
campaign. This summer, he promised to reinstate an ambassador and
ease some economic restrictions. Washington has stopped short of
offering to lift sanctions outright. And there has been little
recent movement on naming an ambassador, triggering grumbling among
Syrian officials.

Still, the thaw has boosted confidence here, as shown by the sudden
rush of Western bankers calling on Syrian officials. In an interview
in his marble and wood office, Abdullah Dardari, Syria's deputy
prime minister for economic affairs, gestures to two business cards
left on his coffee table by executives representing big U.S.
financial firms.